Hedge funds gain 7.6% in 2005

Emerging markets top gainers, Credit Suisse/Tremont says

By

AlistairBarr

SAN FRANCISCO (MarketWatch) - Hedge funds tracked by investment bank Credit Suisse and money manager Tremont Capital Management returned 7.6% on average in 2005 on the back of strong advances in emerging markets.

The Credit Suisse/Tremont Hedge Fund Index, which follows the performance of more than 400 managers, climbed 1.6% in December, lifting the industry benchmark above U.S. equity indexes and bond-market returns, Credit Suisse
CSR, -25.00%
and Tremont said in a statement on Tuesday.

Still, the overall returns lagged global equity indexes. The MSCI World Index was up 10% in 2005.

Emerging-markets hedge funds performed the best in 2005, returning more than 17%, while convertible arbitrage managers lagged all other strategies, losing 2.6%.

Short-selling funds, which focus on betting against stocks, had one of their best years, gaining 17% on average amid ample opportunities in the U.S. equity market.

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